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Weekly Treasury & Bond market review after 30th September, 2011.


Already many experts are questioning about the German vote, as they are saying that it is not enough. Look like many are expecting or better to say, they are sure about Lehman like collapse of Greece. I don’t know about them but what I think that in future we may see a problem between the interest of two groups, one which favor creditors to take a haircuts on their Greece bond holdings and others who wants to save their financial institutions, because they are in suspicion about another round of sell-off in their respective stocks.
The biggest beneficiary of operation Twist will be the long-term  US Treasuries and even before the starting of that operation we are seeing it’s effect on long-term Treasury Yields.

Yields
30th-Sep, 2011
9/23/2011-9/30/2011
9/16/2011-9/23/2011




2-Year Treasury
0.248
13.24%
28.82%
5-Year Treasury
0.95
10.59%
-6.22%
10-Year Treasury
1.912
4.70%
-11.05%
30-Year Treasury
2.907
0.41%
-12.61%

As investors are getting the full picture of new stimulus, we can expect better performance by not only US Treasuries but also from other debts. What Fed is trying is that they are eating up the bonds that are most related to interest rate fluctuations.  US Treasuries ended on a high note in July-Sep quarter. Let see their quarterly ( July-Sep) closings.


Yields
30th-Sep, 2011
1st-July-2011
7/01/2011-9/30/2011




2-Year Treasury
0.248
0.479
-48.22%
5-Year Treasury
0.95
1.786
-46.80%
10-Year Treasury
1.912
3.186
-39.98%
30-Year Treasury
2.907
4.394
-33.84%

This year, in July-Sep quarter, US Treasuries have posted one of the biggest quarterly gains.


Treasury & Bond Market forecast for coming week

10 & 30-Year Treasury Yields are making quite similar type of patterns. In coming days Yields may drop for these long-term Treasuries as buying will come under Fed’s monetary stimulus plan and yields of short-term Treasuries are expected to rise from here.
2-Year Treasury Yield got resistance exactly at 0.26 area as I said in last week, now it’s next big resistance is at 0.36 area. On the downside 0.22 is it’s immediate support, but I don’t think that it is going to test support levels.
5-Year Treasury Yield is getting resistance at 1.00 level. Now after 1.20, its strong resistance is at 1.40. 0.85 is a good support for it.
10-Year Treasury Yield is making pattern like lower highs and lower lows and if things continues it will make new lows. 2.30 is a good resistance for it.
As I said in last week that I am expecting more lows from 30-Year Treasury Yields, this week it tried to go higher levels but ended in much lower position. It’s resistance was at 3.30 but it turned-back into lower levels after the announcement of buying long-term Treasuries from 3rd October. So in coming week we may see more lows from it.

The Treasury is going to sell $56 billion in short-term bills on Monday.
I am not totally pessimistic about Greek problems like many experts as we are seeing many countries like Japan are coming to contribute. So we may hope for better things about Greece, what need is more co-operation from the people of Greece.


Fed’s new QE-3 or as it named operation Twist is going to effect financial markets in coming days. Corporate bonds may be the first stage and later it will spread in different areas of the financial market. It is sure that this new stimulus is going to increase the risk taking capability of the investors and if I am not wrong this is the thing that Fed wants. And who knows we may see it’s effect later on housing related mortgages !


NOTE :  Please see the disclaimer of this blog .



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